You will not get tax benefit if the total PPF contribution exceeds Rs 1.5 lakh in any one financial year.
Do you know that you can open a Public Provident Fund (PPF) account in the name of your child as well. It has always been a favorite investment destination for small savings. Usually no one can open more than one PPF account, but if your child is a minor then you can open a PPF account in his or her name.
This is how you can open an account in the name of a minor child
PPF account can be opened in any post office or bank. It is necessary to mention the parent and minor child in the account opening form. KYC documents, photographs and proof of the age of the minor child of the guardian of the child are also necessary in opening the account. A minimum of 500 rupees have to be contributed to open an account.
Childhood saving habits will benefit later
Through this, you can also make a habit of saving in your child and at the same time if a PPF account will be opened in early life, then it can create a big capital for the child as he gets older.
If you look at the interest of 7.1 percent interest, if you invest 1.5 lakh rupees in PPF for 50 years, then this amount will increase to Rs 6.75 crore.
But, tax benefit will be available on investment up to Rs 1.5 per year
Income tax consultant Narayan Jain says, “The amount of principal, interest and maturity in it is completely tax-free. This is the biggest feature of this scheme. ”
This account will also get 7.1 percent return, but the tax benefit has been limited to 1.5 lakh rupees per annum. This includes the deposit of both the parent and the child.
Says Jain, “You can open a PPF account in your child’s name, but the total PPF contribution should not exceed Rs 1.5 lakh in any one financial year. If you don’t do this, you will not get tax benefit. ”
Only parents or legal guardians can open this account
But, apart from the parents of the child, no one else can open a PPF account in the name of the child. Although grandparents can open an account in the name of their grandchildren, this can only happen when the parents have died and this can be proved through documents.
Apart from this, a nominee has to fill in the PPF account opened in the name of the minor child.
